The biggest threat right now to subscription-based music services isn't coming from consumers or record labels—with millions of customers paying for monthly plans to Spotify and Rhapsody, all four majors see the services as major new sources of revenue. Rather, the biggest threat to these fast-growing companies is coming from artists themselves, and a practice some are calling "windowing."
Instead of making their new music available on iTunes and Spotify at the same time, some big-name acts are staggering their releases in the hope of bolstering traditional album sales. Just as a Netflix subscriber has to wait 28 days before gaining access to new movies, some artists are waiting a certain period before releasing their new albums for streaming on Spotify. Coldplay, for example, "windowed" Mylo Xyloto for months; other mainstream holdouts include the Black Keys and Adele.
FAST COMPANY: What's your take on windowing?
KEN PARKS: My initial take is that it's a very bad idea. From a user standpoint, it's a pretty hostile proposition. The notion that you would want to withhold records from people who are paying 120 pounds or euros or dollars a year is just really mind-boggling. It's pretty hostile to punish your best customers and fans. We think it's a wrongheaded approach. There's certainly no data whatsoever to suggest that this increases unit sales. Windowing is not coming from record labels, which have every incentive to maximize the economic return on their investment for each individual record that they release.
I think all this has to be kept in perspective. These are rare cases right now. I know a lot of ink gets spilled when a band like Coldplay withholds a record. But these are still rare instances. The overwhelming number of records that are released every week are available on our service. That includes records that shoot to No. 1. Some managers and artists who are keen to work with us actually start streaming before the street date.
You've referred to these withholding artists as "corner cases," but many of these artists are more notable acts such as the Black Keys that garner a lot of attention. These artists believe that streaming might negatively affect their sales. Is this simply a myth? And if so, why do these artists believe it to be true?
Certainly it's not supported at all by data and facts. There's no data to suggest that it does [negatively affect] sales. To the contrary, our indicators point out that if you want to increase sales, you ought to be increasing access to your music. People want to listen to music—they don't want a 30-second sample. It's kind of wrongheaded to think you're creating scarcity by withholding [music from Spotify]. When you withhold a record on Spotify, it is available on torrent sites, on Grooveshark, as well as on YouTube likely. You're not creating any kind of scarcity. The very same bands who are withholding from streaming services are often available for free to users on YouTube, which doesn't monetize nearly as well as Spotify. If you think that promoting your record via streaming is a good thing for sales on YouTube, there is no reason as all to withhold it on Spotify. So it's kind of a head-scratcher—there is a bit of schizophrenia, I think, in the camp that wants to withhold their stuff. It's ridiculous to think that an 18-year-old kid who is denied access to listening on Spotify is going to run to iTunes and buy it. That's not the way it works. They're going to go to the torrent sites.
But I want to be very clear. We are not at all demonizing people who have a different point of view. We think that most of the world has been living in a different paradigm for the entire history of recorded music. They're used to unit sales. It's very difficult for some not only to get their mind around a new format but a new business model. It would be silly to think that entrenched behavior and habits—that have developed over a century—are going to change overnight. Look at iTunes in 2003: There was an uproar at the notion of selling records on an unbundled basis. There were high-profile holdouts including Radiohead, who thought it marked the end of the world. Controversies like this are not new. It is not surprising that there will be some taking a pause. It's thankfully a very short list. Most artists are extremely excited to be associated with this platform.
Why would Paul McCartney remove his music from Spotify and Rhapsody? He's been in the music business for so long; I can't imagine this was a rash decision. What's your elevator pitch to get him back on Spotify?
I can't speak to what might be in Paul McCartney's mind. I love Paul McCartney, and wish his music would be available to young kids who predominate our platform, and—let's be honest—might not have heard of him. We're very hopeful that he comes back on the service.
[Regarding the elevator pitch], it would be about reaching fans. Paul McCartney certainly doesn't need the money. I think that artists of his stature—these artists with rich catalogs from years ago—would be interested in legacy and making sure that his work lives on. The best way to do that today is on a platform like Spotify.
But the exact mindset that's operating here with McCartney, I don't know. Remember: It took the Beatles seven years to get on iTunes. But again, we love Paul McCartney.
What about Adele, whose latest album 21 is not on Spotify in full? Would she have still sold 17 million copies of her album if it was available on Spotify?
We think it's very possible she would've sold more. Again, there's no data to support the proposition that windowing on Spotify resulted in increased sales. The strange thing about that was the entire record was not windowed. Spotify has "Rolling in the Deep," which was the biggest single on that record. The other tracks were withheld.
It's been said that the biggest risk of not being on Spotify is potentially alienating your fans. Is that the biggest risk, or are there others?
That's certainly one of the primary risks. There are a lot of risks though. Really, you risk being on the sidelines. You risk people not caring about your music.
There's one band, and they haven't authorized me to use their name, so I won't. They're a very successful band—they've sold millions of records and continue to do so. This band uses what they call the "Give-A-**** test." They want to know if people really care about them. That doesn't mean they look at SoundScan. It means they might look on Spotify to see how many people are getting jazzed about their music enough to make and share playlists with their songs. They know if people start listening to their stuff in large numbers on Spotify, they are going to profit. That's the bottom line: that people give a...well...you get the idea.
Spotify has great integration with the biggest social network in the world. If you are not plugged into that, you are really missing out on what artists have always known, which is that word-of-mouth and buzz really sells records and concert tickets. On Spotify, someone will see a track a friend shared on Facebook, they'll click on it, and then instantly be listening to that record on Spotify. They'll have the SongKick app, which will tell them when the band is playing in his or her town. I can't imagine anyone not wanting to be a part of that environment.
If all the music that is not available on Spotify (from Adele, the Black Keys, etc.) could suddenly be available tomorrow on the condition that Spotify implemented a 28-day window, would that be something that Spotify is willing to consider? Is that something Spotify is looking into?
No, we're not. If these strategies would work for users and the industry, it would be relevant. But because they don't, no, it's not something we're contemplating.
In your view, then, will windowing become more or less common?
Well, it's not common now. But we think cases, rare as they are today, will become even rarer.
[Image: Flickr user Alexis Mire, and Spotify]